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President Obama's College Affordability Plans

Sept. 6, 2013 ~ Vol. 14, No. 27

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It was a busy summer in Washington, DC, for higher education policy. The most widely discussed events were the student loan interest rate compromise that became law in August, the Supreme Court’s long-awaited decision in Fisher v. the University of Texas at Austin, and President Obama’s recent announcement of a host of initiatives to make college more “affordable.” I have already briefed you on the first two developments and I am sure you have read a great deal about the latter, but there are several key elements in the president’s proposals that are worth emphasizing.

College and University Rankings

The president’s plan, introduced in late August at several colleges and universities in the Northeast, has two major parts. The first, which received the most attention, is ranking colleges and universities based on some as yet undefined measures of “value” and “affordability.” Eventually, these rankings would be tied in some fashion to institutional eligibility for federal student aid programs. The initial rankings are scheduled to be published by fall 2015. The link between the rankings and federal student aid is proposed to be in place by 2018, but such a step would require congressional approval, which may be hard to get.

It’s not surprising that the rankings idea has garnered the most public attention. What is far less clear is how this part of the plan will be developed and implemented. Any such system reflects the values of those who create it, which is why institutions may have very different rankings depending on the entity that compiles them. The values are expressed in the formulas used to develop the rankings (that is, what gets included and what does not) and the various weights attached to individual elements. For example, does the rating system give more weight to net price or to the percentage of students who get financial aid?

The data sets used to create the rankings will be very important. Unfortunately, the only data available to the Department of Education, at least initially, will be information collected through the Integrated Postsecondary Education Data System. Not only are there limited federal data that address questions of value and affordability, there are real concerns about the accuracy of some of the information. Federal graduation rates, for example, include only first-time, full-time students and exclude any students who have transferred.

Finally, the government intends to rank institutions according to their “peer group,” but it is not clear how such groups will be defined. For example, will there be a single group for private, four-year colleges or will that large group be broken into smaller subcategories? Obviously, the choices made about how to categorize institutions will be very important to the eventual ratings for individual institutions.

Cost of College

Beyond the rankings, the president’s plans also include a number of ideas and proposals loosely related to the price of college and tuition, some of which have been previously proposed but not implemented. For example, the president wants to “challenge states to fund public higher education based on performance.” Since the federal government does not give states money for higher education, it is unclear how this idea might be approached, other than rhetorically. In addition, the president has proposed to “demand student responsibility for academic performance.” We assume this means the Department of Education will propose tightening the regulatory standards surrounding “satisfactory academic progress” that dictate eligibility for student aid.

The administration has also proposed to “strip away unnecessary regulations.” We believe this means they will make more use of the “experimental sites” authority the department already has under the Higher Education Act, which would allow schools to enter into agreements with the department to waive regulations in return for improvements in institutional performance.

In addition, the department wants Congress to agree to create a $1 billion Race to the Top program for higher education, modeled after a program for elementary and secondary education approved by Congress in the 2009 economic stimulus package. The administration previously has asked for such a program but never secured the legislative authority or funding for it. Given the controversy that has dogged the original Race to the Top program, it is unlikely Congress will go along with this idea in the near future. Similarly, the proposal to create a First in the World Fund to test and evaluate alternative ways to deliver higher education has been advanced before but has not yet received any serious consideration on Capitol Hill.

Finally, the administration has indicated that it will “challenge” colleges and universities to adopt one or more ideas “to improve learning and reduce costs.” The ideas specified are “awarding credits based on learning, not seat time,” using technology to redesign courses, using technology for student services, recognizing prior learning and promoting dual enrollment. None of these are new ideas, and many of you already are experimenting with them. Once again, it is not clear how the administration plans to “challenge” colleges except to do so rhetorically.

Path Forward

One central question is how much of this can be done without explicit congressional approval. The most visible element, the rankings plan, can be implemented under current law. Much of the rest of the package, including the proposal to tie student aid funding to the ratings system, cannot be done without new congressional action. Given the legislative stalemate that prevails on Capitol Hill and the total absence of information about how such a plan would work, it will be difficult for the department to get that authority in the near future. Some of the other ideas, such as Race to the Top and the First in the World Fund, require congressional action that also seems unlikely. The department may have the authority to increase the number of experimental sites, something we have long advocated.

What happens next is unclear. The department has indicated it will schedule listening sessions around the country beginning this fall to solicit views about how to proceed. I have already spoken with several campus presidents who are anxious to host such sessions, but at present we do not have a schedule.

It goes without saying that all of the higher education associations are watching developments in this area very carefully. It is notable that all the statements we put out took a similar view, expressing appreciation for the president’s continued support for higher education and a strong desire to learn more about the how the ideas will be implemented. Stay tuned.